The Rule Of 72

The Rule of 72 is a simple formula that lets you estimate how long it will take an investment to double at a stated interest rate. You simply divide 72 by the prevailing interest rate.

For example, if you’re investing $1,000 at a 6% rate, it will take 12 years for you to accumulate a total of $2,000.

This rule does not reflect any tax consequences. Assuming your $1,000 gain qualifies as long-term capital gain, you will have to pay 20% of your profit, $200 in taxes.

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